State adds mid-year spending as revenue picture stabilizes

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On Feb. 16, Gov. Charlie Baker signed a supplemental budget bill for fiscal 2018 that includes $15 million for school districts hosting students displaced by hurricanes in Puerto Rico and the U.S. Virgin Islands last October.
 
The Department of Elementary and Secondary Education is charged with developing guidelines and application procedures for the education grants. Grant amounts will be allocated consistent with the method for calculating Chapter 70 education aid.
 
According to DESE, about 85 percent of the roughly 2,400 displaced students now enrolled in Massachusetts public schools are in 12 districts: Boston, Chicopee, Fall River, Fitchburg, Holyoke, Lawrence, Leominster, Lowell, New Bedford, Southbridge, Springfield and Worcester.
 
The supplemental budget act (Chapter 24) includes $1.1 million to defray local costs of implementing the early voting law for the 2016 state election. State Auditor Suzanne Bump determined that the law, enacted in 2014, constitutes an unfunded mandate, and the state is obligated to reimburse cities and towns. The amounts to be reimbursed to individual cities and towns are the certified amounts prepared by the state auditor.
 
The governor filed an additional supplemental budget bill last month totaling $160 million to cover expected funding shortfalls this year in a range of state budget accounts, including $45 million for human service programs and $42 million in funding for sheriffs. The bill includes a number of technical corrections to the so-called Municipal Modernization Act that became law in 2016 and new ways that the state can finance Chapter 40R housing production incentive payments.
 
A number of legislators raised the issue of the shortfall this year in the special education “circuit breaker” program, and the MMA is supporting a supplemental appropriation for this important account for school districts across the Commonwealth.
 
The two supplemental budget bills come at a welcome moment of relative fiscal stability for state government. The forecast for state tax collections this year was revised upward in January by $157 million to $26.7 billion. Collections through the end of January were $810 million above the target for the seven-month mark.
 
Revenue Commissioner Christopher Harding warned, however, that the above-benchmark numbers in December and January resulted mainly from estimated personal income tax payments and that actual collections by the end of the year will likely settle back toward the January estimate.
 
Federal tax law changes have had an impact on taxpayer behavior, making it more difficult to forecast state tax collections this year.